Crypto mining is stupid
A nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. To say that the cryptocurrency known as Bitcoin eats a lot of energy is an understatement. In response, green-minded geeks have launched a batch of competing cryptocurrencies that take aim at the seemingly insatiable source of energy consumption that comes with Bitcoin mining, the proof-of-work system. Grist thanks its sponsors. Become one.
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Content:
- 4 Bitcoin Mining Misconceptions All Beginners Think Are True
- Bitcoin mining likely uses more energy than it takes to keep New Zealand's lights on
- Why Did 200 Bitcoin Miners and Oil & Gas Execs Just Meet in Houston?
- Bitcoin Halving: What Does It Mean for Investors?
- Kosovo just banned crypto mining. Why?
- I tried mining Ethereum on my home computer. Here’s what I found.
- Here’s Why You Shouldn’t Mine For Bitcoins
4 Bitcoin Mining Misconceptions All Beginners Think Are True
During the late '90s, Silicon Valley venture capitalists and New York City investment bankers used phrases such as "monetizing eyeballs," "stickiness," and "B2C" to justify the ridiculous valuations of internet companies.
They claimed conventional methods were inapplicable in valuing the dot-com companies -- which had no revenue -- because we were entering an entirely new economy. Believing these people, and afraid to miss out on the gold rush, small-time investors, grandma and grandpa, and barbers and taxi drivers invested their life savings in companies such as Pets. The bubble burst, and they lost everything. Through a transfer of wealth in the billions of dollars from Main Street to Wall Street, VCs, unscrupulous CEOs, and bankers had effectively enriched themselves at the expense of hundreds of thousands of ordinary investors, leaving them to despair about their futures.
History is repeating itself now with bitcoin. This time, it isn't just Main Street USA that is about to lose its shirt; it is also the developing world. Technology has made it possible for hypesters in Silicon Valley, China, and New York City to fleece anyone, anywhere, who has a bank account and an internet connection. The story that bitcoin victims are being sold is that, because we cannot trust government-issued currencies, bitcoin is the future of money.
One investor calls bitcoin "a gift from God to help humanity sort out the mess it has made with its money. This is complete nonsense. Yes, the price of bitcoin may yet double or even quadruple -- because its price is based on pure speculation, and these stories are feeding such speculation.
But bitcoin's market price is almost certain at some point to crash and burn, just as the dot-coms' did, and for the same reason: because it is all hype. And there will be no one to turn to when it does, because no government or bank is backing bitcoin up; and the people who are hyping bitcoin will have cashed out and be long gone. Bitcoin's price is not a reflection of its growing usage as currency; it reflects merely demand for the mirage of its speculative value.
Its price is rising only because people all over the world are hearing stories of how others doubled or tripled their money in a short period -- and they don't want to miss out. Unsophisticated investors are taking out loans to buy bitcoins. Those who have spent the currency feel remorseful when they see its price subsequently increase, so they hoard it. Bitcoin was invented by an unknown person or group to be a digital currency. It allows money to be transferred directly between individuals using cryptography.
The bank ledger is distributed to all users, and complex mathematical transactions ensure transaction integrity. Such a system makes it difficult for governments to know the identities of people exchanging money, so it has become a haven for money laundering, drug dealing, and corruption.
Bitcoins are created or "mined" at predetermined and gradually decreasing rates, with a total limit of 21 million issuable coins. The rate of increase in available bitcoins is not keeping pace with the number of people keen to buy them, so the price of a bitcoin keeps increasing.
Because its price increases, both its "miners," whose computers do complex calculations to earn the currency, and those who buy bitcoins from others feel reluctant to use them as currency by spending them.
Instead, they sit on their coins while they wait for the price to rise further. With bitcoin supply constrained and increasingly falling short of demand, instead of functioning as a currency, bitcoin is a speculative empty asset. First, anyone who has access to a bitcoin password or private key has the authority to spend the bitcoins it unlocks; loss of the password means loss of all of the associated bitcoins, with no recourse.
Second, linear growth in the chain of blocks that make up bitcoin is resulting in exponential growth in the computation necessary to process and verify transactions: Transactions that used to take 10 minutes now take hours. This obviously is not a workable digital currency. What is most worrisome for the planet is the energy expenditure that verifying transactions now requires. The bitcoin network is reportedly consuming energy at an annual rate of 32TWh -- about as much as the entire nation of Denmark.
Each transaction consumes kWh, enough energy to power an average Western home for nine days. China has become the dominant bitcoin-mining nation, with its provinces providing ultra-cheap energy to miners. Digital currencies surely are the future, but other options make more sense than bitcoin. Or India's Unified Payments Interface, which makes it possible to transfer money between people within seconds -- for no fee.
This occurs bank to bank, provides customer support and security, and has little overhead. So there are better and simpler ways. Top Stories. Top Videos. Getty Images. Sponsored Business Content.
Bitcoin mining likely uses more energy than it takes to keep New Zealand's lights on
In a financial world of stocks, bonds, foreign exchange, and credit cards, trillions of dollars are traded daily, with money flows handled by a bevy of databanks. In the world of cryptocurrency, billions of dollars worth of Bitcoin are traded through as many as , transactions per day, consuming the energy supply of a modernized country. Tristan Rayner explores. The cryptocurrency Bitcoin is close to using around 0.
Why Did 200 Bitcoin Miners and Oil & Gas Execs Just Meet in Houston?
But in life, many things are actually not what they first seem. This is one of those things. In fact, it is not only not what it seems. It is the exact opposite. First, we need to establish some contextual groundwork. This is a critical step, because lack of clarity on what Bitcoin is and is not, has the potential to muddle an entire subsequent analysis. In that light it seems stupid. But as soon as you know the thing is meant to fly into space, everything immediately makes a lot more sense.
Bitcoin Halving: What Does It Mean for Investors?
Cryptocurrency markets are notoriously volatile, so perhaps by the time you read this the value might have gone up. Or down again. Not necessarily. Read more: Tulip mania: the classic story of a Dutch financial bubble is mostly wrong.
Kosovo just banned crypto mining. Why?
Cryptocurrency is a popular phenomenon in the 21st century. Since its inception into the world as an established idea in , it has become a household name in every segment of society. As we all know, the growth of Bitcoin, a type of cryptocurrency, and the rise of other competitive coins called Altcoin, have placed cryptocurrency on a pedestal where it commands more attraction. The result of this attraction that it commands is that a troupe of people invest so much into cryptocurrency day in, day out. Either as an investor or a trader, cryptocurrency keeps getting larger and bigger due to loads of investment each year.
I tried mining Ethereum on my home computer. Here’s what I found.
We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info. Scientists at the Search for Extraterrestrial Intelligence SETI are looking to expand their operations twofold, but are being held back by increased cryptocurrency mining. Ever since bitcoin and other tokens hit mainstream levels of awareness, crypto miners have severely driven up the demand for Graphics Processing Units GPUs.
Here’s Why You Shouldn’t Mine For Bitcoins
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Add the following snippet to your HTML:. Learn how to create a solar-powered cryptocurrency "mining rig" with cloud-based reporting on a Raspberry Pi using a PiJuice and Notecard. Read up about this project on. So you're ready to cash in on this cryptocurrency thing, but you're also concerned about the electricity consumed in order to mine your own crypto? The good news is cryptocurrency mining on solar power is entirely possible.
But in some regions, the release was mutilated by Ethereum miners purchasing them directly from the manufacturers. The price of Ethereum increased fourfold in , and after a sudden acceleration in January it exceeded its previous all-time high from late The rise has helped the cryptocurrency mining industry experience an unfortunate renaissance that could lead to a repeat of the disaster. Normally, it's only possible to mine profitably with desktop GPUs sold alone. Prebuilt systems and laptops have a higher markup, and include components that aren't helpful to miners. But those disadvantages have recently been negated, partly because of crypto rising prices, and partly because of improved performance offered by new Nvidia GPU releases. So it's become profitable to mine with cheap gaming laptops.
We use cookies and other tracking technologies to improve your browsing experience on our site, show personalized content and targeted ads, analyze site traffic, and understand where our audiences come from. To learn more or opt-out, read our Cookie Policy. Cryptocurrencies like Bitcoin are constantly in the news, as is the blockchain technology behind them. Is Bitcoin, and other cryptocurrencies, the future or will this experiment gradually fade away like a historical footnote?
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